Aetna Health of California Inc. provides health insurance. For its preferred provider plans, Aetna contracts with a network of physicians and other medical providers who offer care to insured individuals at an agreed rate. Member patients can also see providers outside the network on referral from in-network physicians, but may bear a greater share of the cost.

Effective in 2009, Aetna adopted a “Network Intervention Policy” designed, according to its terms, to “reduce the number of non par [i.e., nonparticipating, or out-of-network] referrals by par providers and if necessary take further action against participating providers who refuse, after warning and education to comply with the terms of their contract.”

The California Medical Association (CMA) is a nonprofit professional organization, founded in 1856, that advocates on behalf of California physicians. By CMA’s count, it has more than 37,000 physician members.

In 2010, at least two years before it filed suit, CMA learned of Aetna’s Network Intervention Policy from its members and became concerned that in threatening termination or actually terminating participating physicians for their referrals to out-of-network providers, the policy’s implementation interfered with physicians’ exercise of their sound medical judgment.

CMA diverted 200-250 hours of staff time to respond to the policy. That time was spent on activities including: (i) investigation for the purpose of “advis[ing] physicians and the public regarding how to address Aetna’s . . . interference with the physician patient relationship in an effort to avoid litigation over this issue”; (ii) “prepar[ing] a 3-page document entitled the ‘Aetna Termination Resource Guide,’ which [CMA] publicized, advising . . . members about Aetna’s new policy . . . , including ways to proactively address and counteract Aetna’s policies”; (iii) engaging with physicians affected by Aetna’s policy and interacting with Aetna on physicians’ behalf; and (iv) “prepar[ing] a letter to California’s Department of Insurance and California’s Department of Managed Health Care requesting that they take action to address” Aetna’s change in policy.

In July 2012, CMA sued Aetna, alleging Aetna’s implementation of the Network Intervention Policy violated the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) both because it was unfairly oppressive and injurious and because it violated specified sections of the Insurance Code, Business and Professions Code, and Health and Safety Code. CMA sought to enjoin Aetna from enforcing the policy.

The UCL confers standing on a private plaintiff to seek relief under the statute only if that plaintiff has “suffered injury in fact” and “lost money or property as a result of the unfair competition” at issue.

Aetna moved for summary judgment. It argued that CMA lacked UCL standing because CMA had not lost money or property as a result of the policy. Aetna emphasized that the policy applied to individual physicians – not to CMA. CMA countered that it had diverted resources in response to the policy. The trial court granted Aetna’s motion for summary judgment on standing grounds. The Court of Appeal affirmed. (California Medical Assn. v. Aetna Health of California Inc. I (2021) 63 Cal.App.5th 660).

The California Supreme Court agreed to hear the case, and reversed the dismissal in the case of California Medical Assn. v. Aetna Health of California Inc. II – S269212 (July 2023)

The issue between the parties is whether resources that an organization has spent to counter an unfair or unlawful practice constitute “money or property” that has been “lost . . . as a result of the unfair competition.” (§ 17204.)

The California Supreme Court held that the UCL’s standing requirements are satisfied when an organization, in furtherance of a bona fide, preexisting mission, incurs costs to respond to perceived unfair competition that threatens that mission, so long as those expenditures are independent of costs incurred in UCL litigation or preparations for such litigation.

When an organization has incurred such expenditures, it has “suffered injury in fact” and “lost money or property as a result of the unfair competition.” (§ 17204.)

In this case the record discloses a triable issue of fact as to whether the plaintiff association expended resources in response to the perceived threat the health insurer’s allegedly unlawful practices posed to plaintiff’s mission of supporting its member physicians and advancing public health.

The evidence was also sufficient to create a triable issue of fact as to whether those expenses were incurred independent of this litigation. For these reasons, the trial court erred in granting summary judgment for the defense. It therefore reversed the judgment of the Court of Appeal, which affirmed the grant of summary judgment.